The bond market is for participants that are involved in the issuance and trading of 澳洲幸运5官方开奖结果体彩网:debt securities. It primarily includes government-issued and co♐rporate debt securities, and can essentially be broken down into three main groups: issuers, underwriters, and purchasers.

Bond Issuers

The issuers sell bonds or other debt instruments in the 澳洲幸运5官方开奖结果体彩网:bond market to f༒und the operations of their organizations. This area of the market is mostly made up of governments, banks, and corporations.

The biggest of these issuers is the government, which uses the bond market to fund a country's operations, such as social programs and other necessary expenses. The U.S. government segment also includes some of its agencies, such as 澳洲幸运5官方开奖结果体彩网:Fannie Mae, which offers 澳洲幸运5官方开奖结果体彩网:mortgage-backed securities.

Municipal bonds—commonly abbreviated as 澳洲幸运5官方开奖结果体彩网:"muni" bonds—are locally issued by states, cities, special-purpose districts, public utility districts, school districts, publicly-owned airports and seaports, and other government-owned entities that seek to raise cash to fund various projects. Municipal bonds are commonly tax-free at the federal level and can also be tax-exempt at state or local tax levels too, making them attractive to qualified tax-conscious investors.

Companies issue corporate bonds to raise money for a sundry of reasons, such as financing current operations, expanding product lines, or opening up new manufacturing facilities. Corporate bonds usually describe longer-term debt instruments that provide a maturity of at least one year. Corporate bonds are typically classified as either 澳洲幸运5官方开奖结果体彩网:investment-grade or else 澳洲幸运5官方开奖结果体彩网:high-yield (or "junk").

This categorization is based on the credit rating assigned to the bond and its issuer. An investment grade is a rating that signifies a high-quality bond that presents a relatively low risk of default. 澳洲幸运5官方开奖结果体彩网:Bond-rating firms like 澳洲幸运5官方开奖结果体彩网:Standard & Poor’s and Moody's use different designations, consisting of the upper- and lower-case letters "A" and "B," to identify a bond's credit quality rating.

Banks are also key issuers in the bond market and they can range from local banks up to 澳洲幸运5官方开奖结果体彩网:supranational banks such as the 澳洲幸运5官方开奖结果体彩网:European Investment Bank, which issues debt in the bond market.

Bond Underwriters

The underwriting segment of the bond market is traditionally made up of 澳洲幸运5官方开奖结果体彩网:investment banks and other financial institutions that help the issuer to sell the bonds in the market. In general, selling debt is not as easy as just taking it to the market. In most cases, millions (if not billions) of dollars are being transacted in one offering. As a result, a lot of work needs to be done—such as creating a 澳洲幸运5官方开奖结果体彩网:prospectus♋ and other legal documents—in order to sell th♑e issue.

In general, the need for underwriters is greatest for the 澳洲幸运5官方开奖结果体彩网:corporate debt market because there are more ri🐓sks associated with this type of debt.

Bond Purchasers

The final players in the market are those who buy the debt that is bei🍒ng issued in the market. They basically include every group mentioned as well as any other type of investor, including the individual. Bondholders essentially become creditors, or lenders, to the issuer. If you buy a🐷 U.S. Treasury, the federal government owes you money. If you buy a corporate bond, the company that issued it owes you money. Bonds are widely considered to be a core part of a well-diversified portfolio.

Governments play one of the largest roles in the bond market because they borrow and lend money to other governments and banks. Furthermore, governments often purchase debt from other countries if they have 澳洲幸运5官方开奖结果体彩网:excess reserves of that country's money as a result of trade between countries. For example, China and Japan are major holders of U.S. government debt.

The Bottom Line

The bondꦏ market includes debt securities issued by governments, corporations, and other entities in order to raise money for various financia🌺l needs.

The three main parties involved in the bond market𒐪 are the issuers (governments, corporations, and entities selling bonds or other debt instruments to fund the operations), underwriters (investment banks and other financial institutions that help the issuer sell the bonds), and purchasers (any type of investor purchasing debt securities to diversify their portfolios and get returns).

Correction-Oct. 18, 2023: This article was corrected from a previous version that misstated the approximate size of the U.S. bond market as of 20𝐆22.